With the growing threat of climate change and increasing awareness of social responsibility, ‘going green’ has become a new way of life, but what does this mean for the trading and investment industries?
While the traditional stables of the trading world are long thought to be finite resources, with commodities such as oil, gold, gas etc. topping traders’ must-have lists, modern ‘green stocks’ are proving an attractive investment for a new generation of ethical traders.
As with any rapidly expanding industry, green shares can be extremely volatile. This can present excellent opportunities for traders looking to take advantage of the market.
Let’s dive in and take a look at some of the industry’s key players.
In the motor vehicle sector, we see old-timers such as Volvo, using the tickers VOLVa and VOLVb, are making headway into the electric car industry. By phasing out combustion style engines, the company promises that all its cars will go electric from 2019. It’s clear that this industry stable is going to make waves and set a precedent for other major car companies.
The world-known company, Tesla (TSLA), owned by billionaire Elon Musk, is focused on designing and building electric cars, rechargeable lithium batteries and solar panels. Best known for its range of cars, including the Model X, Model 3, Model S and Tesla Roadster, which was the first car launched into space on SpaceX’s Falco Heavy rocket.
As expected the solar energy sector is developing at a fast rate, with alternative energy solutions becoming more advanced. First Solar (FSLR) is one of the top providers in America of eco-efficient photovoltaic (PV) solutions. The company manufactures solar panels, and develops utility-scale PV power plants, including the world’s largest to date. It also provides support services including construction, maintenance, end-of-life panel recycling and the financing of projects.
Another leader in the sector is NextEra Energy Inc. (NEE), an American company, headquartered in Juno Beach, Florida. A big industry player, NextEra features on the Fortune 200 list and employs over 14,700 staff members. With a focus on clean energy the company operates clean power services across the US, including wind, solar, nuclear and natural gas.
Ways to trade green
With green trading on the rise, how can would-be traders get in on the action? One way is the traditional style of trading which involves buying stocks in a company outright. Using this method, a trader owns the actual asset or share of the asset and profits if it is successful.
Another well-known alternative, is contract for difference (CFD) trading. This type of trading that involves the creation of a contract between a broker and a trader, where the trader speculates price rises and falls of a certain asset.
An attractive prospect for amateur traders as it provides the opportunity to trade with much higher amounts that the initial capital by trading on leverage. Although, all would-be traders should note – higher leverage means higher risk!
CFD trading also offers a lot of flexibility, which can be especially beneficial in an emerging market. Traders can choose which stock to trade without the commitment of sticking to one company. They can also benefit from both price rises and falls, by going long or short on their trades.
Digital friendly, CFDs are available through various brokers, many will offer a CFD trading app and other online trading services letting their clients trade from anywhere in the world. When searching for a broker, it’s important to find one that is regulated and has a good industry reputation so you can ensure you’re trading safe.
This post is supported by Capital.com; images from Olu Eletu/Unsplash